Photo credit: Nicholas Barbaros
This week, the French TV documentary “Capital” is discussing recent food trends. Among those, hummus and flavored waters, two new food products which bring higher margins for both manufacturers and retailers.
You can read the story’s highlights below and, if you understand French, you can also watch the video:
The Hummus Crave
In recent years, France has experienced not only an explosion of sales of hummus (houmous in French) in grocery stores but also the emergence of some hummus bars. With low-cost ingredients, such as chickpeas and oil, margins are extremely attractive. A hummus bar in Paris sells its hummus dish for 10 euros, for an 8.50 euros margin, even though he uses 40% of sesame paste, the most pricy ingredient. In comparison, some homemade and industrial recipes only have 8-12% sesame paste (tahini). The choice of oil, olive oil or other vegetable oils, also impacts margins significantly.
In France, the two giants, Nestle and Danone, are significantly expanding shelf space with new products in the “water” category.
In 2019, sales of flavored waters reached 20 million liters, a growth of 36% over four years.
Flavors include raspberry, exotic fruits, lemon, hibiscus, cucumber, and more.
And the market of flavored waters even extends to products for the homemaker, like this Tupperware product presented in the documentary: Infuser Detox Water Bottle (with an integrated juicer!).
Disclosure: As an Amazon Associate, I earn from qualifying purchases.
But there is more to the story. There are, in fact, two types of products being launched in this area: pure flavored waters, which is only water and a natural flavor, and “flavored drinks,” which contain added sugar.
And that’s where it gets interesting.
The flavored drinks are also presented in the “water” category in the supermarket, when in fact they, sometimes contain more calories than sodas. This, from a food labeling point of view, is a bit disturbing to see, as it is clearly deceiving.
Margin-wise, a retailer mentioned that those new products represent a 10-15% higher margin for him. And for manufacturers, it is likely to be more profitable as well: one drop of concentrated flavor costs 0.03 euro and is enough for one bottle.
At retail, Danone’s flavored waters are 1.55 euros/bottle, and their flavored drinks are 1.34 euros/bottle. And for Carola, a smaller regional sparkling water brand, its flavored waters retail at 0.68 euros/liter vs. 0.41 euros/liter for its sparkling water, a 66% increase in price.
Interested to know more? I share my time between Quebec and France and I am available for field research projects. See my 2018 research on Norway’s Nordic ingredients and products.